Banque de France v. Equitable Trust Co.

• Decision Date: 21 March 1929
• Citation: 33 F.2d 202
• Parties: BANQUE DE FRANCE v. EQUITABLE TRUST CO. OF NEW YORK. SAME v. CHASE NAT. BANK OF CITY OF NEW YORK.
• Court: U.S. District Court — Southern District of New York

33 F.2d 202 (1929)

BANQUE DE FRANCE v. EQUITABLE TRUST CO. OF NEW YORK.

SAME v. CHASE NAT. BANK OF CITY OF NEW YORK.

District Court, S. D. New York.

March 21, 1929.

Evarts, Choate, Sherman & Leon, George W. Wickersham, Joseph H. Choate, Jr., Maurice Leon, and Eugene J. Conroy, all of New York City, for plaintiff.

Rushmore, Bisbee & Stern, Murray, Aldrich & Roberts, George N. Hamlin, Winthrop W. Aldrich, and A. Donald Mackinnon, all of New York City, for Chase Nat. Bank and Equitable Trust Co.

GODDARD, District Judge.

These motions are to strike out each of the seven separate defenses contained in the answers to amended complaints upon the ground that each of such defenses is insufficient in law, and to strike out from the denials what is alleged to be "the defense consisting of new matter * * * in so far as it is attempted by such new matter to set up the title of the State Bank of the Union of Soviet Socialist Republics."

There are two actions — one against the Chase National Bank of the City of New York, and one against the Equitable Trust Company of New York — each brought to recover gold of the value of $2,600,500. The pleadings in the actions are substantially similar, and the motions are addressed to the respective actions.

It is averred in the amended complaint that: "Before and at the commencement of this action the defendant had and it thereafter held said chattels in its possession in violation of plaintiff's rights as owner thereof, for the account of persons other than the plaintiff and without the plaintiff's consent; and that the possession of said chattels by the defendant was and remains wrongful, and defendant still detains the same from the plaintiff. * * *"

The answer denies the possession by the defendant of the gold, except the defendant "admits that before and at the commencement of this action, it had, and until on or about April 5, 1928, held, a shipment of what purported and was stated to be bars of gold received from the Garantie und Kreditbank fur den Osten, A. G. Hamburg, Germany, by order and for account of the State Bank of the Union Soviet Socialist Republics."

The answer also denies the making of any demand upon them by the plaintiff or any refusal by the defendants, except each defendant "admits that before the commencement of this action, and on or about March 6, 1928, it received a letter, copy of which is hereto annexed, made a part hereof, and marked `Exhibit A' from the attorneys for the plaintiff in this action, demanding delivery of certain gold alleged to have been received by the defendant on or about February 21, 1928 from, or for account of the State Bank of the Soviet Union."

This letter, referred to as "Exhibit A," sets forth the grounds of plaintiff's alleged right to the gold:

"Pursuant to the instructions under which we are acting, we give you notice of the following facts:

"Beginning on or about January 14, 1915, and until July 11, 1917, the Bank of France purchased in the open market in Russia various quantities of gold aggregating at par the value of 52,246,988.77 gold francs, or $10,109.26. This gold the Bank of France thereupon entrusted for safekeeping to The State Bank of the Russian Empire at Petrograd, Russia, to be held for account of the Bank of France for delivery to it upon its demand. This gold upon its purchase became part of the metallic reserve of the Bank of France and has been carried as such ever since to this day. The Bank of France did not consent to the taking over of said gold by the State Bank of the Soviet Union and has duly and repeatedly demanded the return of the same nor has the Bank of France consented to the shipment of said gold to the United States, but since it is in your possession the Bank of France claims it as the true owner and entitled to the immediate possession of the same notwithstanding the fact that it may have been commingled with other gold and whether or not the said gold is the identical gold which was held by the State Bank of the Russian Empire prior to the delivery of said gold to the State Bank of the Soviet Union."

The answers set forth matter alleged by way of separate defenses contained in seven separate defenses, several of which are based upon the plaintiff's alleged right to the gold as stated in said letter, Exhibit A.

First. That the gold in possession of the respective defendants is not plaintiff's property, but was the property of the State Bank of the Union Soviet Socialist Republics.

Second. That the shipment was received by the respective defendants as bailee for the account of the State Bank of the Union Soviet Socialist Republics, and that the respective demands upon them preliminary to the suit being instituted did not afford them a reasonable opportunity to investigate and determine the facts relative to the claim or ownership by the plaintiff, and that in any event the defendants, as bailee, had the right after demand to return and did return the gold to their respective bailors.

Third. That assuming the facts stated in the demand to be true, inasmuch as all gold, if any, of the plaintiff intrusted or delivered to the State Bank of the Russian Empire was confiscated under decrees of the Government of the Russian Socialist Federal Soviet Republic, it is now a part of the Union of Soviet Socialist Republics, which government has been recognized de jure by the Republic of France, of which the plaintiff is a citizen, such recognition validated the acts of the Union of Soviet Socialist Republics including the decrees of confiscation.

Fourth. That by the diplomatic correspondence between the Republic of France and the Union of Soviet Socialist Republics, all claims of the Republic of France and its nationals, including that of the plaintiff, became the exclusive subject of negotiation between the two governments and otherwise excluded the maintenance of any legal proceedings for the enforcement of the same.

Fifth. Assumes that the claim set forth in plaintiff's demand is true, and it sets forth facts which the respective defendants contend established the defense that the gold sought to be recovered is immune from judicial processes in this action.

Sixth. Assumes that the facts stated in plaintiff's demand are true, and avers facts which the respective defendants contend establish the defense that the determination of this action will involve an examination of the acts and decrees of each of said governments of Russia with respect to property located in its own territorial jurisdiction at the time of the making and enforcement of the said decrees.

Seventh. Assumes that the plaintiff's demand states the true facts; sets up as a defense that by reason of the recognition de jure accorded to the Union of Soviet Socialist Republics by the Republic of France, the plaintiff, a citizen and inhabitant of France, is not entitled by comity or otherwise to maintain these actions, for to permit it to do so would subject the defendants to the possibility of double liability.

In their denials of the allegations of the complaints, defendants expressly deny that the gold in question was part of or commingled with the gold claimed by plaintiff to have been intrusted by it to the State Bank of the Russian Empire, and in the allegations of the separate defenses, there is no such averment. Thus the ownership of the gold by plaintiff is denied, and in their separate defenses affirmatively allege that the gold was not the property of the plaintiff. The separate defenses contain no admission or averment that any gold was intrusted by the plaintiff to the State Bank of the Russian Empire, but do contain allegations of confiscation by the Soviet Government of all banks including the State Bank of the Russian Empire.

What is averred in the respective separate defenses is merely that whatever gold, if any, of the plaintiff was in possession of the State Bank of the Russian Empire was confiscated by the decrees of the Soviet Government and thus seized along with the gold in all other banks.

The first separate defense avers that the shipment to it "was not the property of the plaintiff, but is the sole and exclusive property of the State Bank of the Union Soviet Socialist Republics." Plaintiff urges that this defense is insufficient because it contends that the State Bank of the Union Soviet Socialist Republics is to be regarded as legally nonexistent, inasmuch as our government does not recognize the Union of Soviet Socialist Republics of which the bank is a part.

Under section 1093 of the Civil Practice Act (N. Y.), a defendant, "by answer, may defend on the ground that a third person was entitled to the chattel, without connecting himself with the latter's title."

Therefore, in so far as this motion to strike out the separate defense on the ground that it is insufficient is concerned, the averment that the shipment is not the property of the plaintiff, and therefore is the property of some one else, is to be regarded as admitted by the plaintiff whether its ownership is in the State Bank of the Union of Soviet Socialist Republics or not. If it be conceded that inasmuch as our government has not recognized the Union of Soviet Socialist Republics, and that as the State Bank is a part of that government, there can be no ownership by the State Bank of the shipments; the averment that the shipments are not the property of the plaintiff still stands, for there is no admission nor allegation in the first separate defense, or in any other part of the answer, that the gold in question was ever a part of any gold that belonged to the plaintiff or had been deposited by it with the State Bank or had been mingled with gold which at any time belonged to the plaintiff. For instance, under this allegation, the defendants might prove that the gold had never been confiscated by the Union of Soviet Socialist Republics; that it had been mined or procured from other sources subsequent to the time any gold had...